Importance of an optimal warehouse design and facility

I love networking and discussing with other people. You can learn so much from just listen to other peoples experience and knowledge. It is also interesting to visit colleagues in the same business and see how their operations work. When I have been round and visiting warehouses I have noticed one very important thing I haven’t written about yet and that is the importance of a suitable warehouse facility and optimal warehouse design.

I have seen so many different facilities used for warehouse operations, and a lot of them should been abandoned a long time ago because it is impossible to manage an efficient warehouse flow. I understand and respect it is one of the largest costs for logistics to establish a new warehouse or move to other facilities but it is much better to take this decision sooner rather than later instead of making a lot of smaller investments in a small building from the startup of the warehouse and building add-ons like modules for example or in worst case standalone modules beside the main building .

Warehouse logistics is all about efficient flow and by efficient I mean time and distance. You need to avoid bottlenecks and long distances from inbound to storing further to outbound and maybe most important what I see many companies underestimate is free floor space without racks or anything in the different departments. Especially at goods receiving, unloading areas and loading areas. What often happens when you are out of space and have bottlenecks is that you need to move around pallets and stuff many times before you start to work with the material and that means a lot of meaningless “touches” of the goods and that means waste of time and resources and that is not lean. Also it often affects quality in a negative aspect. You can’t find the right pallets and when you move them to much you risk they get damaged. So don’t underestimate the importance of free floor space in order to have an efficient flow.

Another important thing, if you have completely wrong ratios regarding height, length and width in the warehouse you can’t get the most out of your WMS. For example if your warehouse is too low you will for sure have too long travel distances for buffer refill and if the warehouse is long and narrow, features like pick optimization will not have a great effect. All these things affect labor cost which is one of the biggest posts in every warehouse budget. If you have a lot of add-ons on the original building with narrow gates between you will have bottlenecks and also great problems to consolidate outgoing goods for example.

To avoid ad hoc solutions and instead have a long term perspective on warehouse design and operations I recommend using systematic layout planning. SLP (Muther 1965) is a tool used to arrange a workplace in a plant or warehouse for example by locating areas with high frequency and logical relationships close to each other. The process permits the quickest material flow in processing the product at the lowest cost and least amount of handling. It is a step-by-step procedure allowing the planners to identify and visualize the relationships between processes and finding the different alternatives for the layout design (Tompkins, 2003). The process can be described and executed in 10 steps that are depicted in figure below.

I will not go into details in each step but this is a great tool and I warmly recommend to google on this subject and read more about it.

I have seen e-commerce companies with very inefficient warehouse designs and facilities that already struggling with increasing logistics costs. I am sure that they could reduce warehouse operation costs significantly with the right warehouse design. It is so important to do right from the beginning and to have long term plans in these questions. When you design the building from the beginning you also look at how you can scale up in the future without negative impact in your warehouse flow. You also look at the WMS you have and what kind of automation you could use in the future. It is extremely important you have the whole perspective in mind.

Post navigation

1 Comment

Great article, but one further detail often overlooked, regarding pallet and general storage space in particular, is the amount of obsolete and unnecessary inventory the company hangs on to in the belief that one day we will be able to utilise it/sell it. Management and Inventory departments seem to have this ‘packrat mentality’, and hate what they consider ‘waste’, when in reality, it can be written off the books and free up much need space. Just a thought!